MP3tunes.com founder Michael Robertson claimed a victory yesterday in his copyright fight with record label EMI, even though Robertson could be forced to pay as much as $75 million to EMI in damages.

Michael Robertson, founder of MP3tunes.com.
Greg Sandoval/CNET

EMI also ballyhooed a triumph in the case, despite failing to convince the judge to bar MP3tunes from safe-harbor protection under the Digital Millennium Copyright Act. EMI filed a copyright suit against MP3tunes in 2007, accusing that company and sister service Sideload.com of enabling users to search for copies of pirated music and then store them in MP3tunes' locker service.

The truth is that neither side delivered a knockout blow but that each was successful at dinging up the other. The question of whether cloud music services are now more free to act without obtaining licenses from copyright owners is still unsettled to a large degree--especially when you consider that the case will likely be appealed. The judge also said some issues must also still be decided by a jury.

Decisions like this one can be used as precedents to influence other judges. The suit can also offer helpful insight to other services about how to run their operations within the law, according to K. Matthew Dames, a copyright attorney who also holds a Ph.D. in information sciences.

"Judge Pauley virtually lays out a step-by-step guide as to what MP3tunes did to qualify for the DMCA safe harbor," Dames said. "It's almost like a checklist. I think similarly situated businesses could use this in their own operations, or at least use the decision to shore up operational loopholes."

U.S. District Judge William Pauley granted summary judgment for MP3tunes.com on the question of whether the service qualified for the DMCA protection. The DMCA, which was signed into law in 1998, was intended to balance the need to protect copyrighted works while also protecting Internet service providers from legal liability for copyright violations committed by users. If a safe harbor was not available for companies such as Comcast or AT&T, then copyright owners could conceivably sue them when subscribers used their networks to pirate music.

What nobody seemed to know for sure was whether companies that dealt in user-generated materials or digital storage lockers qualified for the safe harbor. We now have three major decisions from federal district courts (Veoh, YouTube, and now MP3tunes) that seem to throw the gates open to the safe harbor for such companies.

"This judge made new law here. He said if someone sends you a takedown notice, you got to go track other people who connected to that same source."

--Michael Robertson

"We're happy to see DMCA protections for ISPs upheld and reinforced," said Julie Samuels, a staff attorney at the Electronic Frontier Foundation, which advocates for tech companies. "This means the courts have recognized that it is incredibly important to protect service providers and allow people to access content."

What was won?
MP3tunes was granted safe-harbor protection for some of the way the service operates but not for others. One of the requirements of the DMCA is that service providers remove infringing material, once alerted by copyright owners. MP3tunes did not do that to the satisfaction of the judge.

Sideload.com is a service that helps users locate free music, and then users have the option to automatically store the free music they obtain via Sideload into their MP3tunes' lockers. EMI sent takedown letters to MP3tunes in 2007, demanding that it remove infringing links and pirated songs from its systems. MP3tunes removed the links but did not sweep the digital lockers of infringing songs. Robertson's company argued that in the case of Viacom v. YouTube, the courts ruled that it was incumbent on service providers to send takedown notices for each specific case of infringement.

The judge wrote that MP3tunes' case was different and that the company should have done more to cleanse its sites.

"MP3tunes interprets the reach of a notice too narrowly," Pauley wrote. "Although MP3tunes removed the infringing links from Sideload.com, it chose not to block any of its users from having unrestricted access to infringing copies of plaintiff's recordings stored in user lockers. Those users remained free to download and experience those infringing copies from MP3tunes' servers. Thus there is no genuine dispute that MP3tunes had actual knowledge its users had stored and continued to have access to infringing copies of plaintiff's works."

Not only did the judge find Robertson and MP3tunes liable for contributory infringement as a result, but the precedent could be a big hurdle for similar services and even for Google, according to Robertson. He said in an interview with CNET last night that once Google receives a takedown notice, the company could conceivably be required to remove infringing materials from Gmail, if Pauley's decision is allowed to stand.

"This judge made new law here," Robertson said. "He said if someone sends you a takedown notice, you got to go track other people who connected to that same source (where pirated songs were obtained). Google uses the same deduplication system that we do. If you e-mail a song to 10 people, they don't keep 10 copies. They keep one song, and they make a note of the other people who have access to it."

Where EMI and other copyright owners got beat up in the ruling is Pauley's reading of the DMCA's "red-flag knowledge." This is the term used to describe when it is clear that a service provider had knowledge of infringement, which the DMCA prohibits. Examples of "red flag" knowledge are when sites employ terms such as "pirate" or bootleg" in their URLs.

Robertson and MP3tunes didn't do this. In addition, the court found that general awareness of rampant infringement is not enough to disqualify a service from the safe harbor. Service providers are required to investigate who is distributing material illegally, Pauley wrote.

"In sum, there is no genuine dispute that MP3tunes may claim safe-harbor protection for EMI works stored on MP3tunes.com," Pauley said in his decision. He, of course, said works that EMI identifies as pirated are not included.

Where does that leave us? Like in so many copyright cases, we must wait for the process to drag on, possibly for years yet. Meanwhile, those on both sides of the Web copyright debate can claim that they have new and important ammunition to use against the other.

About the author

Greg Sandoval covers media and digital entertainment for CNET News. Based in New York, Sandoval is a former reporter for The Washington Post and the Los Angeles Times. E-mail Greg, or follow him on Twitter at @sandoCNET.
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